RBI issues guidelines for appointment of statutory auditors of banks, NBFCs

RBI's guidelines provide necessary instructions for the appointment of SCAs/SAs, the number of auditors, their eligibility criteria, tenure and rotation, etc., while ensuring the independence of auditors.
1 CLAP
0

The Reserve Bank of India (RBI) on Tuesday issued guidelines for the appointment of statutory auditors of banks and non-banking finance companies (NBFCs), including housing finance companies.

'Guidelines for Appointment of Statutory Central Auditors (SCAs)/ Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs, and NBFCs (including HFCs)' will be applicable for the financial year 2021-22 and onwards.

However, non-deposit taking NBFCs with asset size below Rs 1,000 crore have the option to continue with their extant procedure.

The guidelines provide necessary instructions for the appointment of SCAs/SAs, the number of auditors, their eligibility criteria, tenure and rotation, etc., while ensuring the independence of auditors, the RBI said.

As the guidelines are being implemented for the first time for Urban Co-operative Banks (UCBs) and NBFCs from 2021-22, "they shall have the flexibility to adopt these guidelines from the second half of FY 2021-22 to ensure that there is no disruption."

Banks and UCBs will be required to take prior approval of RBI for appointment/reappointment of SCAs/SAs, on an annual basis, the guidelines said.

For entities with an asset size of Rs 15,000 crore and above at the end of the previous year, the statutory audit should be conducted under a joint audit of a minimum of two audit firms. All other entities should appoint a minimum of one audit firm for conducting the statutory audit.

"It shall be ensured that joint auditors of the entity do not have any common partners, and they are not under the same network of audit firms. Further, the entity may finalise the work allocation among SCAs/SAs, before the commencement of the statutory audit, in consultation with their SCAs/SAs," it said.

The guidelines further said that to protect the independence of the auditors/audit firms, entities will have to appoint the SCAs/SAs for a continuous period of three years, subject to the firms satisfying the eligibility norms each year.

Edited by Suman Singh

Latest

Updates from around the world